Graft Report Austerity Can Help to Fight Corruption

Austerity measures are widely hated in many European countries. But a recent study has shown they can have a positive effect in combating corruption, limiting the amount of cash that public officials can give out for things like bloated government contracts.

By Andrew Bowen

Protesters march during a demonstration against political corruption in Valencia.
REUTERS

Protesters march during a demonstration against political corruption in Valencia.


Mediterranean countries like Spain, Portugal and Italy have been given a boost in their fight against corruption through the austerity measures so many of their citizens despise, according to a recent study on corruption in the European Union.

The wide-ranging study found that the euro-zone crisis "has acted as a strong anticorruption agent in these countries, drying up resources and opportunities for corruption." The report, titled "The Good, the Bad and the Ugly: Controlling Corruption in the European Union," was conducted by the Berlin-based Hertie School of Governance and is due to be presented to the European Parliament on Tuesday.

The study divided the EU's 27 member states into four groups, with the three aforementioned Mediterranean countries grouped with Slovenia and Slovakia as states with few opportunities for public corruption, but also with few mechanisms to prevent officials from acting in a corrupt way.

"The capacity to audit and control is considered insufficient in these countries," the study's authors write. "The independence of the judiciary is seen as problematic, at least in Italy and Slovakia, and the tools available to society to control the government are feeble, with low levels of Internet connection (Spain and Slovenia do somewhat better), weak civil society and little media capacity to confront corruption."

While austerity may limit opportunities for corruption in some countries, it could have the opposite effect in countries where, for example, civil servants who are already earning a meager living have their pay cut even further.

"I think it varies from country to country," said Dr. Alina Mungiu-Pippidi, the Hertie professor who led the study. "There are austerity measures that are beneficial... (but) if you reduce wages for policemen or judges, that's not good."

EU Funding Increases Risk for Corruption

Mungiu-Pippidi said she conducted the study to depart from the expert indicators of corruption and build a more complex model that takes into account what the underlying causes of that corruption are.

Her findings also directly contradict the notion that membership in the EU necessarily makes countries less corrupt.

"Older member countries Greece, Italy, Portugal and Spain have all regressed rather than progressed since they first joined -- the first two of them to worrying levels -- and that has raised doubts about the EU's transformative effect on its members," the study found.

Funding from the EU can also have the counterintuitive effect of fostering corruption when government officials are given too much freedom in how to spend that money. An EU grant to expand touristic infrastructure in a country, for example, may end up going to build a soccer stadium that no tourists will likely visit.

EU Needs More Effective Oversight

Mungiu-Pippidi said the EU's controls for how money is dispersed are "very strict formally, so if you respect the forms, you can easily allocate this money to whomever you want." She recommended that the current "post-facto" practice of evaluating projects after they've been funded be replaced with an "early warning mechanism" that flags when favoritism could be a factor in how money is being spent.

She added that there was a direct link between corruption, or favoritism, and overspending, leading to poorer and more corrupt countries spending up to four times more for infrastructure projects than more developed and less corrupt states.

The study concludes by making recommendations to EU policymakers, like reducing bureaucracy and streamlining regulation so that officials have fewer opportunities for corruption.

Opportunities for reform aside, the study also cites a clear link between the wealth of a country and its vulnerability to corruption. Romania and Bulgaria, the EU's two newest and poorest members, can only do so much against corruption as long as their economies lag behind the rest of Europe, Mungiu-Pippidi said.

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